Competitive Intelligence and Global Business - Assignment Example

?eConcierge Business Plan Done By: Methayelle Al Khalifa Mohammed Al Rahma Joelle Dabbah Isa Kanoo Table of Contents Page.....................................................................................................................1 Executive summary ....................................................................................................3 Mission and Vision......................................................................................................3 Culture ........................................................................................................................3 Company description...................................................................................................3 Opportunity Analysis..................................................................................................4 1. Business Model...............................................................................................4 2. Competitors.....................................................................................................4 3. Business Selection ........................................................................................4 Marketing Strategy and Plan .....................................................................................5 Funding Request and Exit Strategies .........................................................................5 I. Revenue Stream .............................................................................................5 II. Revenue sources..............................................................................................5 SWOT Analysis .........................................................................................................6 i. Strength ..........................................................................................................6 ii. Weaknesses.....................................................................................................6 iii. Opportunities ..................................................................................................6 iv. Threats ............................................................................................................7 PESTEL Analysis.......................................................................................................8 i. Politics ....................................................................................................8 ii. Economical..............................................................................................8 iii. Social.......................................................................................................8 iv. Technological .........................................................................................8 v. Environment ...........................................................................................8 vi. Legal........................................................................................................8 Porter’s Five Forces ...................................................................................................9 i. Supply Power............................................................................................9 ii. Buyer power .............................................................................................9 iii. Competitive Rivalry..................................................................................9 iv. Threat of Substation..................................................................................10 v. Threat of New Entry.................................................................................11 Financial Analysis and Projections ............................................................................12 3-Year Strategic Plan ...............................................................................12 Income Statement ........................................................................12 Summary of Income Statement ....................................................13 Appendices ................................................................................................................ 15 Appendix 1 – Start up Schedule Appendix 2 – Income Statement Executive Summary eConcierge is an online concierge company run by intellectual customer service representatives whose primary aim is to fulfil the customer’s needs. The company intends to hire 15 full time employees by the end of its first year of operation. The targeted individual are highly experienced in line with Electronic Concierge; they, will provide high quality services to the clients and customers. eConcierge or the Electronic Concierge is a full serviced electronic concierge that is used primarily for servicing our client’s needs through an online portal that focuses specifically on students and working individuals. The eConcierge company provide the clients with all electronic technology that meet their needs at all costs; hence, freeing them up. The immediate or our first three years objectives include increasing the clients served by 20% per year and enhancing superior performance to evade any failure and using word-of-mouth referrals to get feedbacks from the clients on what areas of the servers need improvement. Mission and Vision Statement Mission: “the mission of this company is to reduce the work load for its clients by allowing them enjoy their free time by leaving their tasks to us. All in accordance to the highest ethical standards, we will provide comfort for all clients with the help of our professional staff at eConcierge” Vision: “We are anticipating to being a daily necessity to all our clients by providing them with services they require and freeing their time by our services.” Culture We are part of our clients through investigating their needs and working on such needs to solve their problems. Company Description The Company will provide a wide range of services for our customers. Our services will range from hotel bookings, car hire, and flight reservations among others. The underlying need will be for services/errands made during normal business or school hours. Opportunity Analysis 1. Business Model The majority of the service would be provided online with clients placing their requests through the system thereby reducing or eradicating completely the need to seek for services physically. Customer service agents would be accessible through both email and phone contact. Alongside the website, the key to the business model is the development of relationships in each city, with restaurants, hotels, travel and many more by using the online services that have been facilitated by the technological development and the internet era. The sophisticated online system will able us to manage a large client base and provide a good service without the need for many employees. Potentially social media could be used to tailor the offering to each individual client. There is considerable data now available about consumers that can be analyzed. 2. Competitors: The key justification for this business is that currently the competitors do not provide a complete easily usable concierge service. Companies and travelers tend to use competitors that can manage either the travel element or the local organization. Secondly, none of the competitors has achieved the scale necessary to have global presence and the ability to provide a quality service to a large number of clients. For many of the larger companies, which would be our company’s largest clients, they currently do the majority of their planning in house at considerable cost. Therefore, our service is not only unique but also allows them to reduce cost. 3. Business selection: With the increased pace of globalization, and the shift in business in which most companies are global and have to access to a worldwide client base, the new business traveler segment is increasing. Therefore, eConcierge will be entering a growth market. The business model is also suited to the new way consumers are sourcing their needs (online and through social media). The startup costs are not prohibitive. Estimation for the initial startup ?50,000 for the creation of website and booking portal and an initial staff of 15 customer service operators which will be increased as the business expands. There is no research and development needed and the larger spend will be incurred through business development which will include advertising and the B2B (business-to-business) marketing costs. There is potential as the first mover in the market to provide a new service that could capture the major business travelers and companies as clients. As these businesses are increasingly outsourcing this allows them the perfect opportunity to reduce cost. Marketing Strategy and Plan Our target market will be the hundreds of thousands of business and leisure travelers globally, along with traveling students. While there are some high-end concierge services, there is a gap in the market for a more mainstream concierge service. The market currently has a gap in terms of online provision. Funding Request and Exit Strategy I. Revenue Stream It is anticipated that there will be several sources of revenue. Firstly, from major contracts with large companies that sends their staff and executives on business trips. Examples include Goldman Sachs, McKinsey etc. Another revenue stream would be from individual travelers which although would be a less consistent revenue source, it is still important in expanding the business. However, potentially a key source of revenue either indirectly or directly, will come from the services that we book. eConcierge is anticipating a large client base. For that reason, the companies (restaurants, hotels, etc) that we will be dealing with will provide us with a fee income or significant discounts that we can use to increase profit margin. II. Revenue Sources: Membership fee of 720? per year (increasing by 5% per year for new customers, but remains the same price for existing members Commission from restaurant, travel agencies, etc Advertisements on our website and app SWOT Analysis:  SWOT is a highly accredited analysis that is used to analyze the product or service that is being offered to the public. Strengths: The price charged for the services of yearlong membership with eConcierge is set a minimal that is appealing to most clients. It is the lowest within the range of competitors such as other concierge companies, and indirect competition such as organizers and planners. Accessible communications such as email, applications and a 24/7 online services portal provides another incentive for clients to choose eConcierge. It sends out an additional sense of quality and safety, which is what every client seeks.  The Company’s capability of providing personalized solutions and assistance to individuals, families and companies will help reduce the time clients spend on tasks that are important but time consuming. Being an online business eliminates the territorial, physical boundaries and restrictions. The services of eConcierge will be offered to the customers globally, effectively and efficiently. Weaknesses: eConcierge is a new company and so the initial client base will be limited. It will take time to build up since the name’s recognition will be nonexistent at the early stages. An online business is fully reliant on Internet access and the connectivity of the member. Shortage in staff members is another weakness we posses since it is only feasible for us to recruit a given amount of employees in a confined space. Generally, it is always better for any concierge facility to have vast employees with specialized backgrounds.  Opportunities:  The possibility of technological advancement is a vital opportunity for eConcierge. The company will start with an eConcierge application that would be free to download on any smart device, which will help reach the company’s aim to becoming globally recognized (App logo on title page). We will have our own specialists working on the features. It will work the same as our website www.econcierge.com, in which our clients request a service and it will immediately go to our professionals whom will grant their request. Existing well-established companies such as Vertu and American Express provide concierge services, which are not mainstream and inaccessible to clients other than their own. Notably, this research has shown that these two companies have not invested in concierge service because of low clients. eConcierge is willing to take advantage of the opportunity and assemble a partnership with companies such as these. It will cause them to spend less on their concierge service, and our company will gain their clients. It is a win-win situation. Threats: Competition in the field of concierge companies is intense globally. The prime competition is quintessentially, which operates anywhere serving to well earning people that constantly require luxury services. As the number of services increase, the company must constantly be updated with new services in order to provide the clients with the high quality that was promised to them. PESTEL Analysis:   PESTEL is an acronym for political, economical, social, technological, environmental, and legal of the market we will manage. Political There is unlikely to be much effect from government activity. Any intervention in the economy in terms of taxation, regulations or trade rules is unlikely to impact on the business model. This also holds true for the international client base, as the services are unlikely to be effected.  Economical  The primary macro-threat arises from economic factors. The business model is dependent on disposable income of clients and perspective clients. The services that they use are sensitive to changes in economic circumstances. An economic downturn or recession is likely to very quickly influence the sector and reduce the discretionary spending of both individuals and companies. While changes of interest rates are unlikely to affect eConcierge due to the low capital requirement, they are likely to noticeably impact on clients.  Social The business model is reliant on a combination of necessity in terms of the demand from high profile clients and companies. However, it is anticipated that a significant percentage of clients will be both leisure travelers and travelling students. The current trend is for them to concierge services to create the ultimate experience and make their travel easier. It is anticipated that this trend could potentially change, with a drive to people becoming more self-sufficient or a reduction in the amount of travelling individuals. Technological Because eConcierge’s business is based on the Internet, changes in technology in the macro-environment are likely to have a constant impact. It is essential that eConcierge maintains it’s website and services in terms of providing the most effective technology. More importantly, as one of the first movers using purely the Internet for the concierge business, it is essential to prevent others from copying and maintain a barrier to entry by continuing to innovate. Environmental As an e-commerce business that does not use many resources, changes in environmental policy could have an impact on the services that clients seek. For example, sustainability issues could affect private air travel, car transportation as well as restaurants.  Legal Alongside any regulations regarding employment, there is an important consideration of data protection and privacy. eConcierge is likely to generate significant data, which must remain confidential in line with any laws around both information and privacy. Porter’s Five Forces: Supplier Power: Since eConcierge is a service industry, it does not require any raw materials directly to produce its service. The eConcierge staff mainly offers the service. The quality of the service will depend on the quality of the staff employed. However, employee’s wages, prices of electronic utilities and other slight operating expenses if raised, will affect eConcierge. Due to the inflation, there is a risk that these expenses might increase over the next few years, to counter the rise in expenses, eConcierge has a policy of increasing its prices by 5% every year leaving supplier’s power minimal effect on business. Buyer Power: eConcierge offers its service at a low price in respect to its substitutes. We are the only company that are primarily focused on being a personal concierge as opposed to our competitors. Therefore, it is expected that eConcierge will have an increasing demand leaving very little room for Buyer’s to affect its prices. eConcierge will be operating in an oligopoly market, where there are only a small number of companies competing and few substitutes resulting in weak buyer’s power. Competitive rivalry: eConcierge has very little competition in the market. The number of companies that offer this unique service is no more than a handful. We plan on forging partnership with some of the competitors who are not strictly focused on their concierge services such as American Express and Vertu. Gaining their client base and the popularity will be a key factor to keep us ahead of our competition. Threat of substitution: eConcierge operates in an oligopoly market gaining a large market share in respect to the small number of competitors available. The major advantage that we will have as opposed to our competitors is that we have a Smartphone app. Therefore, even if a client is on the move, without access to a computer, all they will need to do is click a few buttons on their smart phones and their service will be dealt with. They do not require making a call to us, which consequently will be cheaper on the clients. eConcierge in the long run will be more cost effective then any of our competitors. Threats of new entry: The success of eConcierge might invite new entrants into the market and may reduce its customer base. However, eConcierge seeks to acquire customer loyalty through a well thought out customer service program where clients will be content with the service, and not seek to look elsewhere. This may be the case only if the new entrants had enough time and experience to start a similar business with the same expertise as eConcierge (Blenkhorn, 2005; pg. 225). Financial Analysis and Projections 3-Year Strategic Plan Income Statement: Income Statement Year 1 Year 2 Year 3 Sales (N-1) 36000 52920 71442 Less: Cost of goods sold (N-2) 18000 22800 27600 Gross Profit 18000 30120 43842 Operating Expenses Insurance 1000 1000 1000 Legal License 300 Loan fees 200 Wages (N-3) 9600 9600 9600 Utilities (N-4) 2400 2400 2400 Networking 2837 2405 2405 Auditor's fees 500 0 0 Advertising 2000 1000 0 Maintenance Expense 0 3000 3000 Salary Leave 1200 1600 2000 Depreciation (N-5) 7585 7745 7745 Total Operating Expense 27622 28750 28150 Operating Profit -9622 1370 15692 Less: interest on loan (N-6) 924 924 924 Net profit/loss -10546 446 14768 Summary of Income Statement: Sales The price is set to be 720? for the first year, equalling 60? per month through the course of a year. However, each year prices are to increase by 5% to offset inflation in the economy resulting in the prices to be 756?, 793.8, 833.49 and 875.2? for the years 2, 3, 4 and 5 respectively. As a benchmark, it was assumed that the number of customers during the first year is 50, and each year there will be an increase of 20 customers. The sales revenue was calculated using the formula price x quantity for example year 1: 720*50= 36,000? COGS The cost of goods sold takes into consideration the wages of the employees, which directly perform the service at the headquarters. This is because eConcierge is a service industry and does not acquire any raw materials to produce its service. During the first year, 15 employees resulting in total COGS of 18,000?. In the second year, two extra customer service representatives were employed, increasing total COGS to 22,800. Following the second year, an additional two customer service representatives were employed resulting in 10 third year. Gross Profit Gross Profit is calculated by subtracting each year’s COGS from its Sales for example: Year 1: Gross Profit= Sales- COGS= 36,000-18,000=18,000bd Operating Expenses Operating expenses will include insurance expense, legal license to start a business, Loan fees, headquarter wages, utilities, networking, auditor’s fees, advertising, maintenance expense, salary leave and depreciation. A fixed amount of 1000? is allocated every year for insurance. During the start-up of the business, 300? will be allocated to acquire a legal license to operate and 200? to cover the loan security valuation and arrangement fees. Utilities will cover the cost of water, electricity and telephone bills as well as office and technological supplies. It will require a total amount of 200? per month resulting in 2400? allocated for utilities per year for the course of 3 years. During the first year, 2000? will be allocated for the advertising and promotion expenses as eConcierge requires a marketing campaign to notify the public about its service. However, in year 2 only 1000? will be allocated advertising as by the second year, eConcierge would not require as much publicity as it hopes it has met its marketing objective by the first year. Starting from the second year, the headquarters will require maintenance expenses therefore an amount of 3000? will be set aside for maintenance from second year onwards. Depreciation will be deducted on the headquarters, electronics, furniture and fixtures, as they are the fixed assets of the company (Syed and Raisinghani, 2000; pg. 288). The HQ will have a depreciation rate of 5% due to its long life span where as the electronics will have a depreciation rate of 25% as they have a short life span. The furniture and fixtures will have a depreciation rate of 20% resulting in a life span of 5 years. Each year the depreciation is calculated by multiplying the percentage rate into the worth of the fixed asset. Operating Profit This is the amount of profit before interest is deducted. It is calculated by deducting the total operating expenses from gross profit Interest The loan amount is 25% of the total start-up expenses, which are 184,531. Loan amount= 0.25* 184,531= 46,133 Interest amount annually= 10% of 46,133= 4,613.3 Net Profit The net profit is calculated by deducting the yearly interest paid from the operating profit. It is the earnings left after all expenses and interests are deducted. It can be used as an investment into the company the next year or given out as profit to the partners. Appendices Appendix 1 – Startup Schedule Appendix 2 – Income Statement List of ReferencesTop of Form BLENKHORN, D. L. (2005). Competitive intelligence and global business. Westport, CT [u.a.], Praeger. SYED, M. R., & RAISINGHANI, M. S. (2000). Electronic commerce opportunity and challenges. Hershey, USA, Idea Group Pub. http://site.ebrary.com/id/10019306. Bottom of Form Top of Form Bottom of Form Read More